That's because VNC actually runs as an X display in its own right. Your console occupies :0, so you can't run a VNC display there.
However, there may be another way to get it to work. FC5 has a lightweight VNC server built into the desktop session, which is enabled through the Desktop -> Preferences -> Remote control applet. Ubuntu is quite similar, so you may find there is an equivalent. Otherwise, you'll just have to settle for running a display on :1.